What is Medicare Part D?

Part D is a bit more unique than its Medicare counterparts, as it helps cover prescription drug costs, unlike Original Medicare. 

Why do I need Medicare Part D?

If you take prescription drugs, you should consider Medicare Part D prescription drug coverage. Original Medicare (Parts A and B) doesn't cover most drugs. If you don't have a Medicare Part D plan or other drug coverage, you'll pay for your drugs out of your own pocket, which can really add up. Part D may help lower your prescription drug costs and help protect you against higher costs in the future.

How does Medicare Part D work and what are my options?

With Part D, you have two options, contingent that you already have Parts A and B:

  • Receive coverage through a private insurance company (such as Priority Health) that offers a Medicare Advantage plan with prescription drug (MAPD) plans.
  • Get a stand-alone prescription drug plan (PDP).

Is every Medicare Part D plan the same?

No. Medicare Part D monthly premiums, copayments and deductibles vary from one insurer to the next. You will be able to tell if what you’re taking is covered by checking the Priority Health formulary, which includes a list of approved drugs. If your prescription drugs are not included on this list, Part D may not be the right choice for you financially.

Do I have to pay for Medicare Part D and what does it cost? 

Part D includes what we like to call the “donut hole.” This is a coverage gap that refers to the period during which people with a Medicare Part D plan have to pay for a certain percentage of their drug costs. For example, in 2019, if your total drug costs were to reach $3,820 for the plan year, you would be in the coverage gap. You’d have to pay 37% of the cost for your generic drugs and 25% of the cost for your brand-name drugs until you paid a total of $5,100 in out-of-pocket expenses.

In this situation, once your out-of-pocket expenses total $5,100, your Medicare Part D drug plan coverage begins again. You're responsible for a small copayment or coinsurance and your Medicare drug plan covers the rest of your costs for the remainder of your plan year. This is known as catastrophic coverage. 

Thankfully, the Affordable Care Act made several changes to Part D to reduce out-of-pocket rates when the donut hole is present. 

Beginning in 2011, Part D plan members got a 50% discount on brand-name drugs and a 7% discount on generics while they were in the gap. For 2016, the Part D discount increased to 55% on brand-name drugs and 42% on generic drugs. The Part D discounts will continue to increase every year until 2020, when Part D members will get a 75% discount on both brand-name and generic drugs while in the gap.

When am I eligible for Medicare Part D and when can I enroll?

The sooner you apply for Part D, the better. Ideally, this is done during your initial enrollment period. 

If you decide to wait to enroll in Medicare Part D and you don't have "creditable coverage" (coverage as good as Original Medicare) – for instance from an employer or union – you could end up paying a late enrollment penalty. This late enrollment fee will be added to your monthly premium once you do enroll and will continue for as long as you have Medicare. You'll pay a fee based on the following calculation: 1% of the national base premium for that year for every month you were eligible but not enrolled.

How do I qualify for Medicare Part D? 

You must have an Original Medicare (Parts A and B) plan to qualify for Medicare Part D coverage. If you have Medicare Advantage (Part C), drug coverage is already included. 

Related articles